Malaysia Airlines could close if restructure talks fail

The long-struggling Malaysia Airlines faces another challenge as creditors weigh in on a restructuring plan.

By Bloomberg News, October 12 2020
Malaysia Airlines could close if restructure talks fail

Malaysia Airlines is prepared to shut down if ongoing talks with leasing companies about a restructuring plan fail, The Edge Malaysia cited the national carrier’s chief executive officer as saying.

A “sizable” number of creditors support the company’s plan, some are against it and others are still undecided, airline CEO Izham Ismail told the business weekly in an interview Saturday.

The company needs “to get the 50:50 (undecided) ones with those who have agreed,” Izham was cited as saying in the publication.

Once creditors make their decision, Malaysia Airlines will choose whether to proceed with the restructuring plan or execute “Plan B,” which may involve the passing of its air operator’s certificate to a new carrier under a different name, he added.

The company is working hard to get the cooperation of those involved so it can “move on to the next phase in making the business sustainable,” Malaysia Airlines said in a emailed statement Sunday. “The restructuring involves several stages and we will not be able to share more information at this point in time,” it said.

Malaysia Aviation Group, the holding company for the Malaysia Airlines, is pleased with the level of support it has received from lessors and is “confident that there are appropriate legal mechanisms available should that support not be universal,” it said in a statement Saturday.

Reuters reported on Friday that a group of leasing companies rejected the restructuring plan put forward by Malaysia Airlines, citing people familiar with the matter and a letter from a London law firm.

The airline, wholly owned by Malaysia’s sovereign wealth fund Khazanah Nasional since 2014, announced earlier this month that it had embarked on an “urgent” restructuring exercise that involves renegotiating with lessors, as it sees little sign of the pandemic easing.

The company has cut salaries for management and pilots, offered unpaid leave to employees, and has sought payment deferrals and contract renegotiations since March. It is now reviewing its network and fleet plans.

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